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Prepayments for Accounts Payable in Microsoft Dynamics NAV: Part I

October 17, 2018 | New View Strategies

Now that we’ve covered Payment Terms and Payment Methods, let’s discuss the Prepayment functionality. In many businesses, especially ones where large capital outlays are required to purchase inventory, Vendors may request payment at the time of order placement just to begin processing the order. In those cases, we need to be able to process payment on the purchase order and track it against the receipts.

To begin, let’s review the Purchase & Payables setup. There are a few pieces of information to complete for Prepayments to process correctly. First, the Check Prepmt. when Posting box should be checked. Checking this box will provide a warning message when receiving or invoicing an order that has an unpaid prepayment amount. Second, update the Posted Prepmnt. Inv. Nos. and Posted Prepmt. Cr. Memo Nos. in the Number Series tab.

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The last piece of information to setup is the G/L account used to post Vendor Prepayments, found in the General Posting Setup. This account is typically an Asset account.

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Next, we need to review the Vendor requirements. Does your Vendor always (or mostly) require a prepayment on orders placed with them? Or on certain items you purchase? You can make your purchasing process more efficient by identifying this information on the Vendor card.

To set a Prepayment % by Vendor, find the Prepayment field. (Note: In 2017, you may need to add the Prepayment % field to the page.) In my system, I’ve added it to the Payments tab.

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To add percentages on a per item basis, in the Navigate Ribbon, go to the Purchases section and select Prepayment Percentages. This will bring up the page, filtered to the Vendor. Select the Item No., Starting Date, Ending Date, and the applicable Prepayment percentage.

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In the next installment of the Prepayments blog, we’ll walk through creating the Purchase Order and making the Payment to the Vendor.

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The experts at New View Strategies are experienced Dynamics NAV and Business Central trainers and business process consultants who have walked in your shoes as former Corporate Controllers, Directors of IT, and Solution Architects, and believe increased utilization of your business systems is critical to the continued success of your company.
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